More united Fed board seen at Warsh’s first meeting, according to Kalshi traders
Prediction market traders think consensus will return to the Fed’s policy-setting board when new Chairman Kevin Warsh presides over a June interest rate decision later Wednesday. At the April meeting, the last meeting under former Fed Chairman Jerome Powell, four members voted against the policy, the highest number in more than 30 years.
Investors on prediction market platform Kalshi give a 70% chance of zero dissent in a June vote on the 12-member Federal Open Market Committee. The probability of four members being in opposition, as in April, is only 3%.
The Fed is expected to keep interest rates steady on Wednesday at the current 3.50% to 3.75% level as policymakers continue to assess the extent of rising inflation due to higher oil prices resulting from the Iran war.
At its April meeting, the Fed also kept interest rates steady, and only one opponent disagreed with this decision. This vote was cast by former Fed Governor Stephen Miran, who has consistently advocated lowering interest rates.
Three other dissidents — Fed regional chairmen Beth Hammack of Cleveland, Neel Kashkari of Minneapolis and Lorie Logan of Dallas — objected to language that suggested the central bank could cut interest rates in the future. This showed some members were concerned that the committee’s outlook was too dovish and objected to signals that lower interest rates were coming.
More than half of respondents to Bank of America’s June Global Fund Manager Survey, 55%, said the Fed would take a “hawkish stance” on Wednesday.
When Warsh holds his first news conference as president, traders think there’s a 73% chance he’ll mention “uncertainty,” a 43% chance he’ll mention “quantitative tightening” and just a 20% chance he’ll mention President Donald Trump by name.
Correction: This story has been revised to accurately reflect the names of Beth Hammack, Neel Kashkari and Lorie Logan. A previous version of this story listed them as Fed executives and also misspelled Kashkari’s name.
Disclosure: CNBC and Kalshi have a business relationship that includes customer acquisition and minority investment.
